What is the appropriate classification of this lease

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Reference no: EM131964420

Jostens, Inc leases a machine from Justins Leasing. Ownership of the machine returns to Justins after the 15-year lease expires. The machine is expected to have an economic life of 17 years.

At this time, Justins is unable to accurately predict the collectibility of the lease payments to be received from Jostens.

The present value of the minimum lease payments exceeds 90% of the fair value of the machine. What is the appropriate classification of this lease for Jostens?

Please choose from the following and definitely make sure to explain your reasoning.

a. Operating

b. Leveraged

c. Capital

d. Installment

Reference no: EM131964420

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